Bitcoin Staking Protocol Babylon Sees $1.26 Billion Unstaked

Bitcoin staking protocol Babylon experienced a significant withdrawal on April 17, with $1.26 billion worth of Bitcoin unstaked from its platform. According to blockchain analytics firm Lookonchain, several addresses removed a total of 14,929 Bitcoin from the staking platform.

The security firm identified four addresses that had unstaked varying amounts: 299 BTC, 499 BTC, 1,000 BTC, and 13,129 BTC. One address was responsible for the majority of the unstaked assets, worth approximately $1.1 billion. The current Bitcoin price was around $84,400 at the time of the event.

This substantial withdrawal caused Babylon's total value locked (TVL) to decrease by 32%. Data tracker DefiLlama reported that Babylon's TVL fell from $3.97 billion to $2.68 billion following the unstaking event.

Community speculation about the source of the unstaking has varied. One user on X suggested the Bitcoin might belong to the Chinese government, while another proposed it could simply be a rotation, risk-off strategy, or a trader seeking liquidity.

Though the ownership of the four addresses remains unclear, the fund movements may be connected to a transition initiated by decentralized finance protocol Lombard Finance. Babylon Labs retweeted an announcement from Lombard stating it was unstaking Bitcoin as part of a transition to a new set of finality providers.

Lombard Finance explained they timed the unstaking with the end of Babylon's phase 1 cap 1 on April 24 to ensure users would not miss rewards. They also stated: "All of this BTC will be staked back into Babylon as soon as the unbonding is complete."

The large unstaking event follows Babylon's recent airdrop for early adopters on April 3. The protocol allocated 600 million BABY tokens for early phase stakers, NFT holders, and developers. After this airdrop, $21 million in BTC was unstaked from the protocol, which experts described as common short-term market behavior.

The crypto adoption landscape continues to evolve beyond DeFi platforms. Panama City recently joined municipalities accepting digital currencies for government services. Since April 16, residents can pay taxes, fees, and permits using bitcoin, ether, USDC, and USDT through a bank partnership that converts cryptocurrencies to U.S. dollars at payment time.